Hanekom v Builders Market Klerksdorp (Pty) Ltd and Others (063/05) [2006] ZASCA 2; 2007 (3) SA 95 (SCA) (2 March 2006)

Hanekom v Builders Market Klerksdorp (Pty) Ltd and Others (063/05) [2006] ZASCA 2; 2007 (3) SA 95 (SCA) (2 March 2006)

The Supreme Court of Appeal held that the literal interpretation of s 52(2) of the Close Corporations Act, which would require a sole member to give himself written consent before executing a suretyship on behalf of the corporation, leads to an absurdity and does not serve the legislative purpose of protecting...

Source-derived case information.

Citation
[2006] ZASCA 2
Parties
Appellant: Lindert Hanekom; Respondent: Builders Market Klerksdorp (Pty) Ltd; Respondent: C Harding N O; Respondent: Petrus Jacobus Maryn van Staden N O; Respondent: ABSA Bank Ltd t/a Bankfin; Respondent: The Master of the High Court, Pretoria
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
2 March 2006
Case Number
063/05
Procedural Posture
Civil Appeal / Appeal From Dismissal of Application to Declare Suretyship Invalid and Rescind Liquidation Order
Outcome
Appeal dismissed with costs.
Judges
Scott, Zulman, Brand
Legal Topics
Close Corporations Act, Suretyship, Statutory Interpretation, Sole Member Corporation
Commercial and Corporate Close Corporations Act Suretyship Statutory Interpretation Sole Member Corporation

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Parties

Lindert Hanekom

Appellant

Builders Market Klerksdorp (Pty) Ltd

Respondent

C Harding N O

Respondent

Petrus Jacobus Maryn van Staden N O

Respondent

ABSA Bank Ltd t/a Bankfin

Respondent

The Master of the High Court, Pretoria

Respondent

Procedural Posture

Civil Appeal / Appeal From Dismissal of Application to Declare Suretyship Invalid and Rescind Liquidation Order

Legal Issues

  1. 1 Whether s 52(2) of the Close Corporations Act requires a sole member to provide written consent before executing a suretyship on behalf of the corporation.
  2. 2 Whether the absence of such written consent renders the suretyship invalid.
  3. 3 Whether a literal interpretation of s 52(2) leads to an absurdity in the context of a sole member corporation.

Ratio Decidendi

The Supreme Court of Appeal held that the literal interpretation of s 52(2) of the Close Corporations Act, which would require a sole member to give himself written consent before executing a suretyship on behalf of the corporation, leads to an absurdity and does not serve the legislative purpose of protecting non-consenting members. In the context of a sole member corporation, there are no other members to protect, and the member's signature on the suretyship unequivocally demonstrates consent. Therefore, the requirement for 'previously obtained consent in writing' must be disregarded in such circumstances, and the suretyship is valid.

Court Disposition

Appeal dismissed with costs.

Orders

  • The appeal is dismissed with costs.